ALAN KOHLER, PRESENTER: The hearing implant maker Cochlear has had a strong run since a product recall 18 months ago, almost doubling in price over that time.

But last week, investors bailed out of the company after a 3 per cent slide in interim profits was announced.

So I spoke to CEO Chris Roberts.

Chris Roberts, Cochlear has been a wonderful success story for both investors and the hearing impaired - 20 per cent capital growth per annum over 20 years.

But I just wonder if it's coming to an end, whether Cochlear is entering a position of being ex-growth, mainly because of competition.

CHRIS ROBERTS, CEO, COCHLEAR: Alan, we haven't moved to a position of ex-growth. The fundamentals of this business remain sound in terms of a huge unmet clinical need, an intervention that works spectacularly well, it's reimbursed and we still maintain a very, very strong competitive position - notwithstanding what might happen one half to another half, but in the long term we will continue to change the world of the hearing impaired for the better.

ALAN KOHLER: But isn't it the case that your market share really can't go anywhere but down. You're already the dominant player and you've got now Sonova which has got a 15 per cent market share, having taken over Advanced Bionics, and they're talking about growing by 150 per cent by 2015.

I mean, that's not going to happen without them taking market share off you, is it?

DR CHRIS ROBERTS: I think we welcome competition, though. This market is undeserved and this market will develop by having a number of healthy competitors. So we welcome that healthy competition.

There's enough room for everybody, this is not a zero sum game. This is how do we really advance this intervention?

Last September we celebrated the 30th anniversary of the first implant we manufactured, but it's still very, very early days in terms of how many people we can help, and how much we can improve the intervention.

ALAN KOHLER: Volume growth is one thing but what is happening on price? It looks like you average price fell by 15 per cent in the latest period. Is that right?

DR CHRIS ROBERTS: Well in terms of the first half fiscal 13 versus first half fiscal 12, you're quite right that unit sales were up 27 per cent and sales in constant currency were up 9 per cent.

But there were a lot of moving parts under that, some of that was ASP (average selling price) where we'd supplied some extra units into a tender in China, but there were a lot of other moving parts in terms of how the recall crediting worked. Some of the other moving parts like the bone anchored business sales being flat and the like, so it's not quite as extreme as 27 per cent versus 9 per cent for sales.

ALAN KOHLER: What sort of discount are you providing in China? Is it 50 per cent?

DR CHRIS ROBERTS: Well we haven't given the price for that specific tender, but I think the issue much more in the emerging markets is that we are primarily a wholesaler, in that we have a distributor in many of those markets - whereas with a retailer, if you will, or a direct in markets like Australia or the US or Germany or France.

Now being direct in those markets means there's a lot more selling general and admin expenses associated being direct in those markets and that's less of the case in China.

ALAN KOHLER: Right, so you are maintaining your margin overall and you are getting the growth in China. What's the potential do you think for sales in China?

DR CHRIS ROBERTS: Well, China I think offers a huge opportunity in general as the country economically grows and shares that wealth throughout by growing a middle class with aspirations for having good health care. And there would be at least 30,000 babies born per annum in China with a profound hearing problem who would benefit from an implant, so it's a huge potential market.

But I think that ... I mean, China is one part of Asia Pacific and Asia Pacific is 21 per cent of our global revenue - so Cochlear is not a China story, I mean China is relevant, but it's not only a China story.

ALAN KOHLER: You've been selling something like 23 or 24,000 units per year for a while, for a few years now. What sort of overall potential do you think there is for increases in sales?

DR CHRIS ROBERTS: Alan, we are still implanting way less than incident - so more people in our addressable markets are born deaf or go deaf through acquired deafness each year, more people born deaf or go deaf each year than receive one of our implants.

So we are implanting less than incidence, so our market is bigger today than this time last year.

Our biggest impediment is not really are there people out there who need the implant, it's really awareness. Some people think it's only for children, some people think it's only for older adults and it really is for people of all ages.

ALAN KOHLER: You've been giving the labour laws and the unions a bit of a kicking lately and you've been saying you're very unhappy with the labour laws in Australia as they currently stand. If the ALP wins the election this year, will you move manufacturing offshore?

DR CHRIS ROBERTS: I don't think shifting offshore is the basis of which side wins the 2013 election because governments can change.

But I think the important thing for Australia is that, if Australia is going to have a future, we need a vibrant environment for business. It is business that creates value for the society. And it's disappointing when we end up with an environment that is anti business - and in fact I think both sides of politics are pretty good at regulations.

But we have to create an environment in Australia that is conducive to business - if you want to have a vibrant business environment.

And look, having a vibrant business environment doesn't mean you can't have workers rights at laws - at work, et cetera. I think that by and large you can have social nets to protect people, you can have workers rights at work and can have a conducive environment.

But what you don't want is a set of industrial relations laws that at its very heart is an adversarial system. That doesn't make any sense - to me anyhow.

ALAN KOHLER: The reason I asked that question that way is because if the ALP wins the election, obviously the labour laws won't change but if the Coalition wins they will change.

So the question is if the labour laws don't change, because the ALP wins the election, will you continue to manufacture in Australia?

DR CHRIS ROBERTS: I as a very proud Australian would like to think that Cochlear has a very bright future in Australia. My concern is less about Cochlear per se and more about the future of Australia.

If we drive manufacturing out of Australia it's pretty hard for Cochlear to be the only company manufacturing here, for example. You know, it's hard for young people to leave school and say 'What do you want to do?' 'I want to be in manufacturing'.

This becomes a self-fulfilling prophecy. If you are not careful you start to lose a critical mass. I think there are some incredible challenges for Australia to really face up to the things that we have to do to create a vibrant, healthy environment to encourage business in Australia.

It is surprising out there how much activity really makes it very, very difficult for Australia.

I wake up every day thinking 'What have we got to do at Cochlear for Cochlear to be internationally competitive?' That's the thing that's important to me, and you see some of the things that we do here and you just scratch your head. People don't - clearly don't understand the competitive nature of the world.

ALAN KOHLER: I'm wondering when you wake up in the morning do you think 'In order to be internationally competitive Cochlear has to make its product in Thailand or somewhere'?

DR CHRIS ROBERTS: I don't believe we're at that stage yet, but I believe that we do need a better balance towards a healthy business environment.